Applied Rationality focuses on public policy issues and tries to take a liberal perspective that is consistent (comments to the posts will often show otherwise) with neoclassical, rational-choice economics.

Thursday, September 27, 2012

This morning, the Bureau of Labor Statistics (BLS) released its preliminary revision of the March 2012 jobs tally. The BLS expects that when the revised estimates are released next year, the figures will show that the U.S. had 386,000 more jobs in March 2012 than were initially reported.

Revisions to the jobs figures are necessary because the initial estimates are based on a survey with some sampling noise and with an imperfect sampling frame. Some months after the initial estimates are made, the BLS is able to compare and benchmark them to nearly complete data gathered from payroll tax records. Estimates throughout the year are then readjusted to this benchmark.

When the economy was declining in 2008 and 2009, the BLS initially under-estimated the job losses by 902,000 positions, and we didn't find out how truly awful the employment situation was until a year or so after the actual decline. When the Obama administration famously forecast that its stimulus package would hold unemployment to 8 percent, no one realized that the U.S. was actually nearly a million jobs further in the hole. Everyone knew things were bad--we just didn't know that things were that bad.

Now that the economy is improving, the BLS appears to have under-estimated job gains by roughly a third of a million.

Why does the BLS keep missing the mark? Part of the reason has to do with the entry and exit of businesses during economic swings. Each month the BLS chooses businesses to survey to get its employment numbers. The sampled businesses are selected from a roster of businesses that provided payroll tax records in a recent quarter. Businesses that were created since the last set of payroll tax records were processed aren't on that roster and can't be part of the frame. Similarly, the BLS misses some of the businesses that stopped operating. The BLS makes statistical adjustments for these issues, but these adjustments are based on historical trends, not the sort of huge swings that we saw during the recession and are now seeing during the recovery. The recent pattern has been for the BLS initially to undercount losses during declines and to undercount gains during upswings.

The revision for 2009 was unusually large--a change of 0.7 percent in the employment figures. The current revision, which works out to 0.3 percent, is right at the edge of the historical 0.1 to 0.3 percent average.

In February when the final numbers are released, we will probably discover that the net number of jobs in the U.S. increased over the course of President Obama's first term. For time being, however, the official estimates indicate that there are fewer jobs in the U.S. than there were in January 2009.

Wednesday, September 26, 2012

Bloomberg reports on an astounding and historic energy development--the U.K.'s largest coal-fired power plant (and largest carbon producers) will shortly be refitted to burn biomass and theoretically be carbon neutral.

The change is astounding and historic because of its location in Northern England, not far from the rich coal fields that fed the U.K.'s (and initially the world's) industrial revolution.

If "King Coal" is threatened by renewable energy projects near its original throne, it's threatened everywhere.

Coal's loss may be the environment's gain. The refitted biomass units will emit significantly less carbon than the existing coal units. Also, the biomass is renewable. Biomass releases carbon when it is burned but takes an equivalent amount of carbon in as it is regrown.

However, the potential benefits come with a giant asterisk, involving a huge and uncertain now versus later proposition. The carbon is released almost instantaneously and takes years to recapture. Also, the units will require an enormous amount of biomass--about 7.5 million tons or 3 million acres of trees each year, according to the article.

Some of the biomass can be supplied through waste materials from other lumbering operations, but much more would still be required.

These requirements might mean an valuable jobs and export opportunity for commercial foresters in North Carolina and throughout North America.

Monday, September 17, 2012

What does former Massachusetts Governor Mitt Romney really think of Americans?

Mother Jones has some damning video of him speaking to supporters when he thought he was unrecorded. The worst of it is a nasty piece of class crass warfare.

There are 47 percent of the people who will vote for the president no
matter what. All right, there are 47 percent who are with him, who are
dependent upon government, who believe that they are victims, who
believe the government has a responsibility to care for them, who
believe that they are entitled to health care, to food, to housing, to
you-name-it. That that's an entitlement. And the government should give
it to them. And they will vote for this president no matter what…These
are people who pay no income tax.

When he's through belittling the incompetents who support the President, he turns his fire on the half-witted independents that he needs to win over.

We speak with voters across the country about their perceptions. Those
people I told you—the 5 to 6 or 7 percent that we have to bring onto our
side—they all voted for Barack Obama four years ago. So, and by the
way, when you say to them, "Do you think Barack Obama is a failure?"
they overwhelmingly say no. They like him. But when you say, "Are you
disappointed that his policies haven't worked?" they say yes. And
because they voted for him, they don't want to be told that they were
wrong, that he's a bad guy, that he did bad things, that he's corrupt.
Those people that we have to get, they want to believe they did the
right thing, but he just wasn't up to the task. They love the phrase
that he's "over his head." But if we're—but we, but you see, you and I,
we spend our day with Republicans. We spend our days with people who
agree with us. And these people are people who voted for him and don't
agree with us. And so the things that animate us are not the things
that animate them. And the best success I have at speaking with those
people is saying, you know, the president has been a disappointment. He
told you he'd keep unemployment below 8 percent. Hasn't been below
eight percent since. Fifty percent of kids coming out of school can't
get a job. Fifty percent. Fifty percent of the kids in high school in
our 50 largest cities won't graduate from high school. What're they
gonna do? These are the kinds of things that I can say to that audience
that they nod their head and say, "Yeah, I think you're right."

Finally, Gov. Romney offers another way that he could appeal to voters. With respect to his father's background, he says, "Had he been born of Mexican parents, I'd have a better shot of winning this."

We should all take some satisfaction in Gov. Romney shedding his soulless, robot image. Too bad, though, that he's adopted a soulless jerk persona instead.

Friday, September 7, 2012

The Bureau of Labor Statistics reported this morning that the U.S. added a piddling 96,000 non-farm payroll jobs on a seasonally-adjusted basis in August. The seasonally-adjusted unemployment rate slipped down from 8.3 to 8.1 percent, but the decline was entirely an artifact of U.S. adults leaving the labor force. Compounding the disappointment, job growth numbers from June and July were also revised downwards. Average hourly and weekly earnings for those who were employed also fell.

A line from the second page of the report tells you most of what you need to know. "Since the beginning of this year, employment growth has averaged 139,000 per month, compared with an average monthly gain of153,000 in 2011." The U.S. needs to add about 150,000 jobs per month to keep up with the growth of the adult population.

Earlier this week, Julia Rodriquez, a DNC delegate from New York, told a reporter at the Democratic convention in Charlotte that if she saw Gov. Mitt Romney, "she would like to kill him."

Her reprehensible comments have (appropriately) drawn the attention of the Secret Service.

The comments were beyond the pale and have no place in the country's political discourse. It's not clear what steps the DNC can take to censure Ms. Rodriquez, but she has no place in the Democratic party.

Thursday, September 6, 2012

The Standard & Poor’s 500 Index (SPX) climbed above the highest closing level since 2008 as the European Central Bank announced specifics of its bond-buying plan and data boosted optimism in the labor market.

You would think that this would carry some weight with the "pro-business" Republican party.

It would be nice to be reporting lots of additional positive economic news, but today's stock market post sure beats the one from nearly four years ago.

Tuesday, September 4, 2012

The Washington Post has a fascinating article this morning about how development planning advice from police experts can lead to safer neighborhoods and attractions.

The concept of police working with developers is not unique to
Washington, but experts say Lanier’s department is ahead of many of its
peers. While some offer a stock list of design recommendations, D.C.
police make specific suggestions about safety measures as blueprints are
being drawn, well before the first buckets of concrete are poured.